Solve for the allocation of labor which would equate WC = WE, solve for the equilibrium weekly wage rate, and show your results on a labor allocation diagram.
Consider the labor allocation problem for the specific factors model in the medium run. Assume that PC = $120, PE = $60, MPLC = 500 – LC/10, MPLE = 400 – LE/20, and LC + LE = 4000 persons per week. Solve for the allocation of labor which would equate WC = WE, solve for the equilibrium weekly wage rate, and show your results on a labor allocation diagram. Using the area … Read more